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Until now,
foreign nationals who wanted to set up a company in the United Arab Emirates
had to implement a number of legal requirements. This also included the search
for a local sponsor or a co-investor, i.e. a UAE national or UAE company.

According
to Article 10 of the UAE Federal Law 2/2015 on commercial companies, the latter
had to hold at least 51 percent of the shares. In practice, trading partners
were often involved in this process, who renounced their right to a say in
society or the company and stayed away from everyday business and made no claim
to profits, but also no participation in losses. An exception was made for the
so-called free zones. This is a kind of free trade zone which is not subject to
the above mentioned law. The attractiveness of locating a company in a free
zone will continue to exist, as these offer further attractive benefits such as
customs and tax exemptions.

The UAE
cabinet allow 100 percent foreign ownership of companies

At the end
of May there has now been a significant change: The UAE Cabinet, led by Sheikh
Mohammed bin Raschid Al Maktoum, Vice President and Prime Minister of the
country, has announced its decision to allow 100 percent foreign ownership of
companies in the United Arab Emirates. The resolution of 20 May 2018 is to be
implemented, which will significantly change the current situation of ownership
restrictions in the UAE. Implementation of the law is expected from the third
quarter of 2018.

Cross-industry
attractiveness:

The prospect
of 100% ownership rights should be of interest to companies of all sizes and
orientations. The UAE offers a large local market and proximity to the major
emerging markets. With the possibility of 100 percent ownership rights, a
significant improvement in the attractiveness of the UAE as a business center
can be expected. More companies, entrepreneurs and talents from all over the
world are to settle there. This should also contribute to the improvement of
the business index for the United Arab Emirates.

The new
visa system:

This is
part of the country's decision to introduce a new visa system for international
"investors and talents", which provides for a long-term 10-year visa
for certain professions. Sheikh Mohammed also instructed the Ministry of
Economy to coordinate with the parties concerned to implement the resolution
and follow its developments, saying that the decision will be implemented by
the third quarter of this year. The new system provides for a residence visa of
up to ten years for professionals from the fields of medicine, science,
research and technology as well as for scientists and innovators. This means
that entrepreneurs and start-ups working on innovative solutions in these areas
will emerge as direct beneficiaries of this change. There are also five-year
residence visas for students in the UAE.

No such
change was foreseeable in the UAE. However, it is clear that the country is
prepared to use all possible levers to promote the diversification of its
economy. The government has recognised that this is also accompanied by changes
to the legal framework conditions. The incentive for foreign entrepreneurs and
investors to become active in the UAE is now greater than ever - and should be
used where possible. Considered an attractive business location worldwide, the
UAE also offers interesting opportunities for start-ups, especially in view of
Dubai EXPO 2020, which invites companies from all over the world to present
their innovative solutions and participate in this major project. It is to be
hoped that the efforts for the reindeer state can be carried out without
complications and above all: pay off.